"The reports of my death have been greatly exaggerated."
On Thursday, the Walt Disney Company issued its quarterly earnings release.
https://cdn.thewaltdisneycompany.com/sit...rnings.pdf Disney's Cable Networks segment, which is largely driven by ESPN, saw revenues increase for the quarter by 12% compared to last year ($4.245 Billion vs. $3.776 billion) and
operating income increase by 30% ($1.655 billion vs. $1.274 billion). For 12 months, revenues were up 10% and operating income by 5%.
The earnings release described the causes of the quarterly improvement at ESPN as follows:
The increase at ESPN reflected higher affiliate and advertising revenues, partially offset by an increase in programming costs.
Affiliate revenue growth was driven by contractual rate increases and
an increase in subscribers. The
increase in subscribers was due to a full quarter of the SEC Network, which launched in August 2014, partially offset by a decline in subscribers at certain of our networks. Growth in advertising revenue reflected higher units sold, partially offset by lower ratings. Higher programming costs reflected a full quarter for the SEC Network, additional rights for the US Open Tennis tournament and contractual rate increases for Major League Baseball and NFL rights, partially offset by the absence of rights costs for NASCAR.
On the earnings call, Disney CEO Robert Iger addressed the cable subscriber issue directly. From
http://www.nasdaq.com/article/disney-pus...z3qigRbwUi :
Amid Wall Street concerns that declining numbers of cable subscribers bode ill for big media companies, Robert Iger is heavily touting the digital future.
Cable companies that offer "large bundles" are "being challenged by these new entrants," said Mr. Iger. "We're seizing the opportunity to distribute our content with these new entrants because we think they deliver better user experiences [and] the price-to-value experience also tends to be attractive to young people."
On Thursday, Disney signed a deal to include some of its channels on Sony Corp.'s PlayStation Vue service, a so-called "skinny bundle" offered through the company's videogame console.
"They came to us to negotiate a deal because clearly the product they launched was not penetrating the marketplace as much as they expected and they needed ESPN and ABC," said Mr. Iger.
Mr. Iger also said of such less-expensive television offerings: "The more the merrier . . .
clearly these platforms cannot launch successfully without our array of channels."